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Having their own business is just about everybody’s dream especially now that companies are laying off their workers and the problem of unemployment is ballooning. Recently, people who suffer this problem venture into home based business and try their entrepreneurial skills. Gone were the days where you have to have a huge amount of money to start up a business of your own. Nowadays, with a home based business, you do not need to have a huge capital. You just have to pour in time and effort to make it successful and flourishing.To start a home based business, you can go to the internet and scout for them. There will be a lot of such ventures offering you information but you have to ensure that you engage in the legitimate ones. To know which are genuine or not, research first and get to know who are the people behind them. Find out if they have a good track record of successful entrepreneurs they trained and who were able to thrive in their own business. Know whether their vision, mission and goals are attuned to your own principles and standards.It is not difficult to build a home based business. You just have to be directed accordingly by experts and you have to have a model that will serve as your inspiration and guide. There are a few reputable specialists in the field who would be able assist you in starting and then succeeding just like the way they have helped other entrepreneurs. These people have started out just like you and your wants and desires were quite similar to yours. Therefore, they understand you and they want you to achieve what they too have accomplished.When you are in the right path of having a home based business, the amount of money you want to make will depend on the time you pour into it. If you wish to make much money on a certain time period, the effort and moments you pour will be commensurate to your earnings. Be patient while you work away because success is in your own hands. It is said that people who start their home based business following the formula of the experts usually make a six figure profit. Therefore it is important to learn from the professionals in this field. You are ensured that you will not be fooled and you will not be caught in a scam.The answer of having a successful home based business is really patience, time and proper guidance. The internet will help you a lot in introducing you to the right people and usually these persons offer and teach you their techniques of how to succeed through their information materials and videos. They will give you these for free without any obligation on your part and you may even share them with your family, friends and acquaintances. They will teach you how to market your product through social networking in the comfort of your own house. You will be able to earn money fast, enjoyably, and educationally.

For a small business to grow into a big business, it needs a loan unless it has exceptional sales and profit margins. A small business owner has quite a few places where he/she can go with a loan request. Banks seem to be one of their options on most occasions. What these owners might not realize is that banks have recently developed a reputation for rejecting small business loans. It seems that banks are more interested in financing large businesses due to their benefits. A bank can come up with a variety of reasons to reject loan approval for a small business. Some of the common reasons are as under:

Reasons for Banks to Reject Your Small Business Loan

Credit History

One of the barriers between you and the business loan is credit history. When you go to a bank, they look at your personal as well as business credit reports. Some people are under the impression that their personal credit does not affect their business loans. But that’s not always the case. A majority of banks look into both the types of credits. One of the aspects of credit that matter a lot to the banks is credit history. The length of your credit history can affect your loan approval negatively or positively.

The more information banks have at hand to assess your business’ creditworthiness, the easier it is for them to forward you the loan. However, if your business is new and your credit history is short, banks will be unwilling to forward you the desired loan.

Risky Business

You must be aware of the term high-risk business. In fact, lending institutions have created an entire industry for high-risk businesses to help them with loans, credit card payments, etc. A bank can look at a lot of factors to evaluate your business as a high-risk business. Perhaps you belong to an industry that is high-risk per se. Examples of such businesses are companies selling marijuana-based products, online gambling platforms, and casinos, dating services, blockchain-based services, etc. It is imperative to understand that your business’ activities can also make it a high-risk business.

For example, your business might not be a high-risk business per se, but perhaps you have received too many charge-backs on your shipped orders from your customers. In that case, the bank will see you as a risky investment and might eventually reject your loan application.

Cash Flow

As stated earlier, your credit history matters a lot when a bank is to approve your loan request. While having a short credit history increases your chances of rejection, a long credit history isn’t always a savior too. Any financial incidents on your credit history that do not favor your business can force the bank to reject your application. One of the most important considerations is the cash flow of your business. When you have cash flow issues, you are at risk of receiving a “no” from the bank for your loan.

Your cash flow is a measure for the bank to know how easily you return the loan. If you are tight on cash flow, how will you manage the repayments? However, cash flow is one of the controllable factors for you. Find ways to increase your revenues and lower your expenses. Once you have the right balance, you can approach the bank for a loan.

The Debt

A mistake that small business owners often make is trying out too many places for loans. They will avoid going to the bank first but get loans from several other sources in the meantime. Once you have obtained your business funding from other sources, it makes sense to return it in time. Approaching the bank when you already have a lot of debt to pay is not advisable at all. Do keep in mind that the debt you or your business owes affects your credit score as well. In short, the bank does not even have to investigate to know your debt. An overview of your credit report can tell the story.

The Preparation

Sometimes, your business is doing fine, and your credit score is in good shape as well. However, what’s missing is a solid business plan and proper preparation for loan approval. If you haven’t already figured out, banks require you to present a lot of documents with your loan approval request. Here are only some of the documents you will have to present to the bank to get approval for your loan.

Income tax returns
Existing loan documents
Personal financial documents
Affiliations and ownership
Business lease documents
Financial statements of the business
You have to be exceptionally careful when these documents and presenting them to the bank. Any discrepancies can result in loan rejection.

Concentration of Customers

This one might come as a surprise to some, but a lot of banks consider this aspect of your business seriously. You must not forget that loans are banks’ investments. Businesses that approach the banks are their vehicles to multiply their money in the form of interest. If the bank senses that your business does not have the potential to expand, it can reject your loan request. Think of a mom and pop shop in a small town with a small population. If it only serves the people of that town and has no potential to grow further, a rejection is imminent.

In this particular case, even if the business has considerable profit margins, it relies on its regular customers for that. The bank might see it as a returnable loan but not as an investment opportunity.